Sen. Warren Opposes ‘Audit the Fed’ Bill

A critical question for Sen. Rand Paul’s effort to expand oversight of the Federal Reserve’s interest-rate decisions is whether he could win support from the central bank’s leftist critics in Congress.

Sen. Elizabeth Warren said on Tuesday she does not support proposed legislation to audit the Federal Reserve.

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But one of the Senate’s most prominent liberal Democrats says she’s not on board.

Sen. Elizabeth Warren (D., Mass.), a member of the Banking Committee and an outspoken critic of the Fed’s oversight of big banks, said she does not support Mr. Paul’s proposed legislation, which she said could have “dangerous” implications for monetary policy.

“I strongly support and continue to press for greater congressional oversight of the Fed’s regulatory and supervisory responsibilities, and I believe the Fed’s balance sheet should be regularly audited – which the law already requires,” Ms. Warren said in an emailed statement. “But I oppose the current version of this bill because it promotes congressional meddling in the Fed’s monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.”

Mr. Paul, a Republican from Kentucky, introduced the so-called “Audit the Fed” bill last month with 30 co-sponsors, of which only one was a Democrat – Sen. Mazie Hirono of Hawaii.

Republicans control 54 of the Senate’s 100 seats, short of the 60 votes bills usually need to clear procedural hurdles. This means the bill’s prospects are dim unless it can garner Democratic support.

As a member of Senate leadership with a high public profile, Ms. Warren could have given the bill a big lift if she endorsed it. Instead, her opposition could signal that other Democrats are not likely to favor it.

On Tuesday, Richmond Fed President Jeffrey Lacker joined the chorus. “If you look at the nuts and bolts of what it really does, it facilitates high-frequency harassment of our decision-making process, our monetary policy decision-making process,” he told reporters in Raleigh, N.C. “I don’t think anyone would view that as a constructive approach to oversight of any other agency, and certainly not one as important as the Federal Reserve.”

Mr. Lacker said he doesn’t think the bill will become law: “I think cooler heads will prevail, ultimately.”